Auditor says Kabel Deutschland worth more than Vodafone offer

FRANKFURT (Reuters) - An auditor's report concluded Kabel Deutschland was worth almost a quarter more than what Britain's Vodafone offered for the rump of the company, potentially helping hedge fund Elliott argue its case for a higher price for its stake.

Having secured a stake of more than three quarters in Kabel Deutschland, Vodafone about a year ago offered 84.53 euros per share ($104) in cash to remaining shareholders as part of a so-called domination agreement.

But not all shareholders were happy with this price and the report by auditor Constantin GmbH was commissioned and paid for by Kabel Deutschland after a motion filed by Elliott at a meeting of the group's shareholders in October last year.

The report, a copy of which has been seen by Reuters, says valuations by investment banks based on the company's long-term prospects indicated a value for Kabel Deutschland of 104 euros per share and estimated additional synergy effects from the tie-up with Vodafone at up to 19.50 euros a share.

Elliott, which owns 13.5 percent of Kabel Deutschland according to Thomson Reuters data, and investment management firms Davidson Kempner and York Capital are suing Vodafone for more for their holdings.

Elliott in October asked a Munich court to order the company to give it a full copy of the auditor's report. Kabel Deutschland said it would make the report available once certain sensitive information had been edited out.

"The discrepancy between the investment banks' considerations of the company's value and the takeover price paid by Vodafone is not plausible according to the findings of the report," the auditor wrote in the report.

The auditor also said the company had not provided the documentation necessary to clear up the discrepancy.

Vodafone said such a takeover price was unrealistic.

"The offer was unanimously recommended by Kabel Deutschland's boards taking into account the views of their investment bank advisers and accepted by 76.6 percent of shareholders," a spokesman said.

Elliott declined to comment.

Kabel Deutschland said it agreed with Vodafone on the issue. Chief Executive Manuel Cubero, appointed after the takeover, said in October the auditor had found the offer price may not have been appropriate.

(Additional reporting by Arno Schuetze in Frankfurt and Kate Holton in London; Editing by Leslie Adler and David Holmes)